Assets of Community Value - Beware the Pitfalls

Specialist commercial property solicitor at Holmes & Hills, Laura Gale, discusses Assets of Community Value and the potential pitfalls that need to be considered.

What is an ACV?

A property/land can be nominated and listed as an ACV if its main use is to further the social wellbeing or interests of the local community. The Localism Act states that “social interests” include cultural, recreational, and sporting interests. Most commonly here at Holmes & Hills Solicitors, we see pubs registered as ACVs, particularly in smaller, or rural, villages.

Who can nominate a site as an ACV? 

Organisations with a local connection (such as parish councils, neighbourhood forums, charities, and community interest groups) can nominate a property/land as an ACV. If the local authority decides that the application meets the criteria, the property/land will be listed as an asset and will remain on the register for at least 5 years.

Can I buy an ACV?

Yes, you can, but beware of properties with ACV status. 

When purchasing property/land of cultural significance, it is more important than ever to consider putting a local authority ("LAS") search in hand. A LAS will confirm whether the site has been listed as an ACV and, if so when that listing is due to expire. It will also confirm whether the local authority has received notice of any potential sales. 

If a site has been registered as an ACV, it means that a sale cannot proceed until the nominating community organisation has been given the chance to be treated as a potential bidder. The legislation does not provide a right of first refusal. Instead, it gives time for the nominating entity to source funding required to bid to buy the asset on the open market. If a vendor wishes to sell a listed asset, they must first inform the local authority, who will liaise with the relevant community organisation. If the said organisation wishes to make a bid, they can request that the local authority trigger a moratorium period, during which time the vendor cannot proceed to sell to a third party.

There are two moratorium periods, which start on the date the vendor gives the local authority notice of their intention to sell:

1. The interim moratorium period (6 weeks) gives the community organisation time to decide if they want to be considered as a potential bidder. 
2. The full moratorium period (6 months) then gives the community organisation time to develop a proposal and raise the capital required to bid to buy the asset. 

Are there exemptions? 

Yes, the Assets of Community Value Regulations outline exemptions where the moratorium periods will not be triggered (meaning an ordinary sale on the open market can proceed without delay). These include (amongst others):

1. Where the disposal is a gift;
2. Where the disposal is between family members;
3. Where the disposal is part of a transfer of going concern (“TOGC”) where a trading business is being sold;
4. Where the disposal is by personal representatives of the deceased owner in order to raise money for matters connected with administration of the estate;
5. Where the disposal is required for statutory purposes or pursuant to insolvency proceedings;
6. Where the asset transfer is between group companies; and 
7. Where there is a legally enforceable requirement that the asset should be sold/transferred to a specific person, e.g. pursuant to an Option Agreement or Pre-emption Agreement (provided that the relevant Agreement pre-dates the ACV listing).

If a vendor is not sure that they will succeed in making exempt disposal, they should notify the local authority as a precaution (and a buyer should be aware of the delays this may cause). 

Plan ahead 

Disposals made in breach of the Regulations may be set aside. It is for this reason that due diligence should be carried out with care.

It is important to be aware of a site's ACV status prior to procuring a mortgage offer. If an offer is issued and it later transpires that moratorium period(s) needs to be complied with before the sale can be complete, there is an increased likelihood of the offer expiring prior to completion of the sale and purchase. Obtaining an offer extension can be costly if further broker, valuation, and admin fees need to be incurred.

Additionally, ACV status may have the effect of removing permitted development rights. Accordingly, formal planning permission may be required for alterations carried out at the property, and for any changes of use. For this reason, it is important to review your planning needs prior to committing to purchase an asset with ACV status. If required, a contract conditional on the grant of satisfactory planning permission can be negotiated.

If you require any assistance with your purchase, please feel free to contact Holmes & Hills' specialist commercial property lawyers to discuss your requirements. Our leading Planning and Development Team is also on hand to provide expert advice on the planning implications of a property’s status as an ACV.